40 percent of Americans don't have a budget

Comments: Do you budget or smudget?

I am a stay-at-home mom of four children ages 2 to 8. I have tried every budgeting technique that I have ever heard of and given up on all of them. I buy what we need when we need it, but I shop at stores that I know have good prices, and I'm known to make impulse buys for the sake of the sale.

Otherwise, I just kind of hope that it all works out in the end!

Mark Carruthers, New York

As a retirement planning specialist, I help clients to plan for their financial futures. This often includes getting their budgets under control. Unfortunately, most individuals see the word "budget" as a bad word and don't have the discipline to stick with a plan. So outside of the really motivated, a budget often becomes a "smudget," and they hope money is left over each month!

Noah Rosenfarb, Short Hills, N.J.

I am a financial planner, but do not use a budget. Thankfully, my wife and I are both "savers" so we spend much less than we make each month. As a result, we don't need a budget. We still monitor our expenses so we know what we're spending.

We also group our expenses into three categories. One is "recurring monthly obligations" like our mortgage, utilities, cellphone, cable, etc., which are usually paid via online banking without having to do anything. The second is repeat expenses but they come infrequently (called "sometimes"). These are car/home insurance premiums, vacation expenses, etc. The third we refer to as "choices" -- which means we have to pull out our credit card or wallet to pay for it. This includes dinners out, groceries, gas, etc.

Since I'm a wealth adviser, I recommend clients use these categories when doing their own planning and budgeting. The "choices" can be easily adjusted as needed.

If people have a tough time managing their finances, it can make sense to take a set amount of cash from the ATM each week and use that toward the choices (no credit cards). If they run out -- then they need to wait until it's time for their next ATM withdrawal (usually on Mondays).

Mandy Williams, Houston

The best advice I got from my mother was initially intended to be a punishment. She was tired of me constantly asking for clothing so she put me on a clothing budget. Mom's advice, ultimately, made me comfortable with numbers and financial matters, which has greatly influenced my life. In part, it is responsible for our book (co-authored with my sister) being the basis of a personal finance program at KIPP Houston High School (a top-ranked U.S. high school).

Do I budget? No -- I have an approximate amount of money I can spend every month and that is as close as I get. When I spend too much one month, I merely become frugal (which is a relative term) the following month.

Have I given students a misconception when I basically advise them to "Do as I say, not as I do?" No, because the underlying theme of our financial literacy program is learning to make decisions based on your values and priorities. This budget method works for me because the use of my time is better spent making more money than it is calculating all the details of how I spend the money I have already made and saved.

Andrew Schwartz, Reading, Mass.

I'm a CPA and my wife is a CFP. We don't actually have a formal budget for our household. Instead, what we do is called "back into the budget."

Here is how it works: To back into your budget, start by subtracting your estimated monthly outflows from your net salary and other inflows. Next, sign up with a bank or mutual fund company to have that amount of money automatically transferred out of your checking account into a savings or money market account each month. For example, if you bring home $7,500 per month and estimate that you need $6,000 to pay all of your bills, you'll want to automatically transfer $1,500 into a savings account each month.

If, at the end of the month, you don't have enough money in your checking account to pay all of your bills, simply transfer some money back from your savings account to cover the shortfall. Each time you dip into your savings, you'll know that you didn't meet your budget for that month.

Bankrate wants to hear from you and encourages thoughtful and constructive comments. We ask that you stay focused on the story topic, respect other people's opinions, and avoid profanity, offensive statements, illegal contents and advertisement posts. Comments are not reviewed before they are posted. Bankrate reserves the right (but is not obligated) to edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused. We do not permit the inclusion of hyperlinks in comments and may remove any comment that includes a hyperlink.

Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on certain links posted on this website.